June 27, 2017 by Steven Yoon, Business in Vancouver
The broker opens offices in Australia, New Zealand
Foreign-exchange broker EncoreFX is expanding into the Asia-Pacific region and is eyeing the U.S. and European markets.
Once one of Victoria’s highest-valued private companies, the firm was founded as Custom House before being sold in 2009 and rebranded as EncoreFX in 2015. The new company doubled its revenue in its second year as the firm surpassed 1,000 corporate accounts and $1 billion in transactions. As a foreign-exchange (FX) broker, EncoreFX specializes in helping small and medium-sized enterprises (SMEs) hedge against fluctuations in currency values when importing or exporting goods.
“We help them to reduce their foreign-exchange risk, and they’re exposed to the risk no matter what they do because … they have to import from China in U.S. dollars and sell their products in Canadian dollars,” said Tessa Breukels, EncoreFX’s vice-president and Vancouver branch manager. “So, if they hadn’t been doing their hedging, then the cost of their imports would have skyrocketed and then they squeeze their margins.” EncoreFX has around 115 employees. Its most successful division is in B.C., where its Victoria and Vancouver locations handle more than 300 corporate clients.That tally is buoyed by B.C.’s status as a hub for importing and exporting – particularly in the trade of food products with Asia, Breukels said.
Custom House started in 1992 as a retail shop for tourists to exchange currency in Victoria. Through aggressive advertising, the business expanded to branches across the globe. By the time it sold for US$370 million to Western Union (NYSE:WU) in 2009, it had processed more than $35 billion in transactions. CEO Peter Gustavson, who founded EncoreFX with contacts he made through Custom House, has in the past few months been expanding to branches in the Asia-Pacific region, with offices in Sydney, Australia, and Auckland, New Zealand.
The key to rapid expansion for a smaller, non-commercial bank service like EncoreFX is its affordability and closer interaction with SMEs, Gustavson said. “Most medium-sized businesses can’t afford to have a full-time foreign-exchange specialist that’s managing their risks and opportunities around foreign exchange. For the most part, the banks aren’t providing any systems in developing strategy. They’ll sell you the products, but mostly online. The advantage of using Encore is that we’re going to spend the time to get to know your business, what your FX risks and opportunities are, and then come back with a recommended strategy.”
EncoreFX is now seeking to expand into the U.S. and European markets.
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